County workers remaining with five years to retire will not be forced to join a new pension scheme if MPs pass a government-sponsored Bill before Parliament.
The County Government Retirement Scheme Bill, 2018 waiting MPs' final approval for President Uhuru Kenyatta to sign it into law will see thousands of county workers have their own pension scheme.
The Bill sponsored by Majority Leader Aden Duale provides that workers expected to retire in five years after the proposed law is enacted to remain members of existing pension schemes.
The existing schemes such as Laptrust, Lapfund and the County Pension Scheme (CPA) will be required to pay retired members their pension packages before being collapsed into the new scheme.
“The existing pension Funds should not worry because the proposed scheme exempts employees with less than five years of retirement. Their pension will be paid as per the Legal Notice Number 50,” Duale said.
The Legal Notice bars national government employees seconded to counties and the defunct local authorities workers absorbed in county governments remaining with five years of service from subscribing to a new pension plan.
“Smooth transfer of county government staff is needed and to safeguard them to benefit in terms of remuneration, allowances and pensions. Any member should bring necessary amendments to ensure this law is in place to safeguard interests of county government workers,” Duale said.
Controversies surrounding the merger of the existing schemes, unclear provisions on managing liabilities and assets and members' fear of losing their pension after the merger has delayed the formation of a scheme for county workers
Minority Leader John Mbadi is opposed to the merger of private and public schemes.
He instead wants the Local Authorities Provident Fund (Lapfund), a public pension scheme, enhanced to manage county employees retirement contributions.
“We need to look into this Bill critically. You cannot merge a private institution with a public institution. We already have Lapfund, a state corporation scheme. If there are problems in the public institution, we resolve them,” Mbadi said.
The Suba South MP and ODM chairman insists that Lapfund is protected by the State Corporations Act and the Public Finance Management Act, hence, cannot be merged with private competitors like Local Authorities Pension Trust (Laptrust) and CPA.
“There is a Fund that exists; we need to improve it; we need to transition it without carrying forward the liabilities that have been incurred and protect it in law to deliver,” Mbadi said.
Duale's proposed Bill lowers the employees minimum deduction from 12 per cent to 7.5 per cent from salary towards pension contribution.
The Bill maintains 15 per cent monthly pension contribution counties have been remitting as retirement package for every employee.
County governments will be required to remit the employee deductions by the 10th day of every month or risk paying interest for not honouring the deadline, according to the Bill.
However, Mbadi wants county workers like their national government counterparts upon joining a registered pension scheme to be shielded from contributing to the National Social Securities Fund (NSSF).
“It is discriminatory for county governments staff to contribute to the proposed scheme and at the same time contribute to NSSF as proposed by the new Bill,” he said.
Duale's proposed Bill brings draft laws to set up a scheme for county workers to three.
Mbeere North MP Muriuki Njagagua is also sponsoring the County Pension Scheme Bill, 2017 which under scrutiny by National Assembly's Finance committee.
Nairobi Senator and Senate Labor committee chairman Johnson Sakaja is sponsoring the County Governments' Retirement Scheme Bill, 2018, heading to the final Third Reading stage before taken to President for the assent.
“We would be required to do some harmonization. We want a scheme for county employees to be put in place as soon as possible. This is a matter that has been pending for a long time,” Sakaja told Star on phone.